Fund provider real estate 24 financial repression in the Federal Republic of Germany and the United States as a challenge for acquiring assets in Hamburg, 14.8.2011. The name of financial repression referred to the State money guidance to the Deleveraging of public budgets in the face of otherwise free markets. The term was coined in 1973 by the US economist Shaw and McKinnon. Given the increased inflation rates in the Federal Republic of Germany and the United States of America, interest rates would rise at a functioning capital market and real capital losses prevented. That this is not the case in the Federal Republic of Germany and the United States, is located on State intervention in the interest rate and bond markets. These include low interest rate policy of the ECB and the US Federal Reserve, as well as the legally preset banks with Basel II and Basel III investment in government bonds. In the United States of America, the inflation rate has reached the level of 3.6% in July 2011. In Germany, the inflation rate has reached a high of 2.4% in July 2011. Learn more about this with Bruce Schanzer.
In the same month, the average fell Yield on German Government bonds also 2.4%. It follows a real return of 0.0%. After taxes, the rate of return was negative. It is minus 1.14% at the top tax rate of 45% plus 5.5% solidarity surcharge. The low interest rate policy of central banks as well as the forced investment in government bonds distort the interest rate market. This manipulation lead to lower interest rates across the entire maturity spectrum. They come at the expense of private assets and pension rights.
Higher nominal tax revenues when falling interest rates reduces the interest burden of public finances. At the same time, the real value of the open public debt falls. They grew greatly in the wake of the financial and economic crisis, because public finances over a practically unlimited State guarantee for ailing German banks and EU border States were significantly impacted.